Minnesota hiring continues to gain momentum; 14,500 jobs added

Article by: Adam Belz

Star Tribune

March 22, 2013 - 5:45 AM

February capped the strongest six-month streak of job gains in Minnesota in nearly 30 years, defying fears that federal budget gridlock and a round of across-the-board spending cuts would undermine business confidence and discourage hiring.

The state’s employers added 14,500 jobs last month and 28,000 positions in the first two months of the year, while the unemployment rate stayed at a better-than-the-nation 5.5 percent, according to figures released Thursday by the Minnesota Department of Employment and Economic Development.

Minnesota has added 50,800 jobs since the end of August, the largest half-year gain since 1984. The state has now clawed back all but 1,000 of the 156,000 jobs it lost in the recession, and the remaining deficit consists of jobs in government.

“We seem to have picked up a head of steam here, an upward momentum in our job growth that appears to be substantial enough that we’re able to weather the headwinds that our Congress is throwing at us,” said Steve Hine, a state labor market economist.

The United States as a whole has regained about two-thirds of the jobs it lost in the recession.

Minnesota’s biggest February gains were in professional and business services, a broad category that includes law, engineering, temporary help, computer and software-related jobs, accounting, architecture and management.

The sector added 6,800 jobs on the month, which bodes well for the larger economy, Hine said.

“Their employment depends on how well businesses are doing in manufacturing and health care and other areas,” Hine said. “Within that sector, the temp help component is probably the most indicative of other businesses’ labor needs.”

Minnesota outpaces national averages — with unemployment far lower than the U.S. rate of 7.7 percent.

It has also emerged as a dividing line between the economic vigor of the northern Great Plains and the continued struggles of Great Lakes states to the east.

In January, the most recent month for which data is available, Wisconsin’s unemployment rate was 7 percent, Illinois’ was 9 percent and Michigan’s was 8.9 percent.

To the south and west, Iowa’s rate was 5 percent, South Dakota’s was 4.4 percent and North Dakota’s was 3.3 percent.

“It strikes me how heterogeneous the U.S. economy is,” said Pete Ferderer, an economist at Macalester College. “In a perfect world, unemployment rates would be pretty equal across states.”

But they’re not, perhaps reflecting the fact that many people can’t easily relocate to states with better work opportunities.

More than one in five mortgages across the country is still underwater, Ferderer said, so unemployment rates aren’t equalizing across regions of the country the way they did during economic recoveries before the Great Recession.

“People are more willing to hang in there than pack up the U-Haul,” Ferderer said.

The hiring outlook in Minnesota has improved despite concerns over the so-called fiscal cliff and across-the-board federal spending cuts that went into effect March 1. Ferderer believes the magnitude of the impact of Washington gridlock has been overstated.

In Minnesota, specifically, the spending cuts will not cause severe harm.

“I think for Minnesota, we’re very fortunate because we’re not dependent on the federal government,” Ferderer said. “We would probably be one of the states least affected by that, compared to Southern California, Connecticut, Rhode Island, Virginia.”

Over the past year, trade, transportation and utilities have added the most jobs in the state, growing by 15,200, reflecting hiring at auto dealerships, hardware stores, trucking firms and wholesale firms.

The other sectors that added jobs were education and health services, adding 13,100 jobs, and professional and business services.

“It looks like it’s a continuation of a trend of positive news for Minnesota’s economy, especially when they revised last month’s unemployment rate back down,” said Toby Madden, an economist at the Federal Reserve Bank of Minneapolis.

Sustained job growth across several sectors of the state economy is especially encouraging, Madden said.

All metropolitan areas in Minnesota have added jobs in the past 12 months.

The Twin Cities were up 2.4 percent, Mankato is up 2.2 percent, Rochester is up 1.6 percent, St. Cloud is up 1.5 percent and Duluth-Superior is up 1.2 percent.

“The expansion we’ve been in for a year now looks like it’s accelerating,” Madden said.